LTV 40% Applied to Owned Shares for Loans on 'Equity Accumulation Type Sale Housing' (Comprehensive)

[Asia Economy Reporter Donghyun Choi] It is expected that mortgage loans will become available for the 'Equity Accumulation Type Sale Housing' proposed in the August 4 real estate supply measures. Compact cities will be initially excluded as project sites, and land such as Yongsan Maintenance Depot that can be utilized will be discussed with the Ministry of Land, Infrastructure and Transport and others, with an announcement expected as early as September.

At a press briefing held at Seoul City Hall on the 12th, SH Corporation revealed three new housing brands, including 'Yeolliji Home,' a housing model developed to help the 30s and 40s generations purchase their own homes. The equity accumulation type housing system allows buyers to pay 20-40% of the sale price initially and then purchase additional equity over 20-30 years.

Loans for purchasing Yeolliji Home are also expected to be possible. However, the loan-to-value ratio (LTV) of 40% applies only to the initial equity purchased by the buyer. Cheon Hyun-sook, Director of SH Urban Research Institute, emphasized, "When taking out a mortgage loan, the LTV 40% applies only to one's own equity." She added, "Statistics show that about 38% of Koreans take out loans when purchasing their first home, meaning about 60% is covered by their own funds, so the initial equity burden is not considered excessive."

Seoul City and SH Corporation plan to supply a total of 17,000 Yeolliji Homes by 2028 by selecting new housing supply target areas such as underutilized idle sites and public facility complex projects. Compact cities, which by regulation must include only rental units, are excluded as project sites. The exact sites and quantities of Yeolliji Homes to be supplied have not yet been finalized. An SH Corporation official stated, "We expect to announce the project sites as early as September."

Kim Se-yong, President of SH Corporation, explained, "We need to consult with the Ministry of Land and others regarding the lottery system, point system, project sites, and initial equity ratio. Nothing has been finalized yet." He added, "SH Corporation has supplied rental housing targeting income quintiles 1 to 4 and general sales targeting the 7th quintile and above, but Yeolliji Home targets the previously excluded 5th and 6th quintiles."

In addition, SH Corporation unveiled 'Nuri-jae,' a pension-type small-scale housing maintenance project brand that guarantees stable retirement life for people in their 50s and 60s. Nuri-jae is a model where homeowners aged 60 or older participating in voluntary housing maintenance projects can sell their existing homes to the public and resettle in public rental housing built on the site, receiving the sale proceeds plus interest as a pension over 10 to 30 years. Kim said, "It is structured so that residents move into a new home and simultaneously receive the liquidation amount in installments over a long period. Although designed for 30 years, if residents wish to continue living afterward, they will be given priority to stay."

Furthermore, a housing brand for people in their 20s and 30s called 'Able Lab' was announced. Able Lab, launched as Season 2 of 'Dojeon-suk,' a work-live integrated startup support housing for one-person creative enterprises and prospective entrepreneurs, will include ▲creation of startup clusters near campus towns ▲strengthening tripartite cooperation among autonomous districts, universities, and SH Corporation ▲participation in construction-type Dojeon-suk projects ▲development of new floor plans in preparation for the 'post-COVID' era.

To supply the first Able Lab, SH Corporation signed a business agreement last month with Nowon District and Seoul National University of Science and Technology and is building a 'startup cluster creation project model.' Space planning highlighting the advantages of Able Lab, which combines office and residential spaces, and the development of new floor plans reflecting untact trends for post-COVID preparation began in July. Site and funding arrangements are planned for next year, with construction scheduled to start in 2022.

Kim Se-yong, President of SH Corporation, said, "We will continue to build various public housing models and work together with Seoul City and the government to successfully implement the August 4 real estate measures."

This content was produced with the assistance of AI translation services.